“Consumer credit increased at an annual rate of 8 percent in May. Revolving credit increased at an annual rate of 11-1/4 percent, while nonrevolving credit increased at an annual rate of 6-1/2 percent.”

The key points for me:

I like to calculate a trailing quarterly year over year rate to smooth out this data. We’re at 4.3% growth here.

Revolving credit was up 11.2B in May.

This is more evidence that the consumer is beginning to borrow again as the effect of the balance sheet recession is reduced.

We still require large budget deficits to sustain positive economic growth as low interest income and continued de-leveraging will require support from the government.

The biggest risk to the economy remains a sharp decline in the size of the deficit putting increasing pressure on consumers to borrow or de-lever while cutting back on spending. The deficit supports spending while balance sheets heal.